El Salvador - China Relations
China and the Republic of El Salvador established diplomatic relations on 21 August 2018, after the Central American country severed diplomatic ties with Taiwan. State Councilor and Foreign Minister Wang Yi and EL Salvador Foreign Minister Carlos Castaneda signed a joint communique on the establishment of diplomatic relations in Diaoyutai State Guesthouse in Beijing. El Salvador become the fifth country to break "diplomatic relations" with Taiwan since Tsai Ing-wen of the pro-independence Democratic Progressive Party became the leader of the island in May 2016. Only 17 countries still have "diplomatic relations" with Taiwan.
The United States rebuked El Salvador's decision, and threatened to review its own ties with the country. "The US is deeply concerned about the El Salvador's acceptance of China's interference in the internal affairs of countries in the Western hemisphere and will reassess US-El Salvador relations," the White House said in a statement. The US State Department said that the US was disappointed at El Salvador's decision to cut ties with Taiwan and is reviewing its relationship with El Salvador. The US State Department said China unilaterally changed the status quo and urged China to refrain from coercion actions that would damage the Taiwanese people.
The US Ambassador in El Salvador Jean Manes said that El Salvador's decision would impact relations between the US government and El Salvador's government. The American Institute in Taiwan said that the Chinese mainland's move to unilaterally change the status quo would damage regional stability. Some US senators said this would push the cancellation of assistance to El Salvador from the US side.
China called on the US to reassess its stance regarding the establishment of diplomatic relations between China and El Salvador, after Washington criticized the Central American nation's decision. "We urge the United States to view correctly the establishment of diplomatic relations between China and El Salvador."
El Salvador did not maintain official political ties with the Chinese and instead maintained diplomatic relations with Taiwan. Both to nurture this relationship and to continue to facilitate considerable private-sector investment, Taiwan maintains a representative office in San Salvador with staffing that includes two executive officers and at least one officer in each of the standard disciplines: political affairs, economic affairs, and public affairs, as well as an intelligence officer.
The Taiwan International Cooperation and Development Fund provided backing for the Central American Economic Development Fund (ROC-CAEDF). Established in 1998, ROC-CAEDF had provided a number of loans to the GOES for environmental regulation, earthquake reconstruction, and educational development; three El-Salvador-specific loans ranged from $4 million to $8 million. These loans have been part of a series of loans to all seven Central American nations in response to their recognition and support of Taiwan. Taiwan also provided incentives to companies to invest in these economies; however, it is not clear to what degree this has affected investment decisions of Taiwan's business sector.
There had been large-scale business deals proposed but not signed, such as a $470 million combined investment to build an optical-disk manufacturing plant, a shoe-manufacturing plant, and a medical campus. These were part of a first-tier investment that would later include assistance to improve the port of Acajutla, as well as rail lines through El Salvador and Guatemala to the Guatemalan Gulf Coast, providing a rail-bridge alternative to the Panama Canal. This would open up new trade routes from Asia to the US East Coast.
According to Ministry of Economy data, El Salvador's total trade with China was valued at $117.2 million in 2004. Of the $3.6 million in exports from El Salvador to China, $2.2 million were scrap metals and 0.5 million agricultural goods. Salvadoran imports of Chinese goods totaled $113.6 million, including $19.1 million in textiles and apparel, $18 million in shoes, and $7 million in audio/visual equipment. There had been no discussions on trade agreements between El Salvador and China. There may be limited Chinese investment in El Salvador, but only indirectly through cross-ownership of Taiwanese firms by Chinese investors. The Chinese provided no development assistance to El Salvador.
From February 28 to March 2, 2005, a Chinese delegation headed by Vice President of the Institute of External Affairs Wang Zhen spent three days in El Salvador meeting with Salvadoran businessmen and leftist political leaders. SIMO reported that President Saca had authorized the visit at the behest of the FMLN, a leftist opposition party, which supports breaking ties with Taiwan and establishing relations with China. SIMO also reported that Saca prohibited members of the government from meeting with the delegation. However, Wang did meet with FMLN deputies. Wang told the media that diplomatic recognition would enhance commercial relations with China and made clear that such recognition would necessitate the severance of El Salvador's diplomatic ties with Taiwan.
In keeping with El Salvador's historical position, President Saca publicly replied to the Chinese suggestion that it break ties with Taiwan by saying, "No country can place conditions on El Salvador's external relations . . . If Chinese investors want to invest in the country (El Salvador), then let them come, but we are going to continue to have relations with Taiwan."
The FMLN maintained a direct relationship with the Chinese, and were the FMLN to win the presidency, there is no doubt that El Salvador would cease to recognize Taiwan and would instead establish diplomatic relations with China. SIMO reported that in late June 2005 China opened a "Friendship House" in Quezaltepeque, an FMLN stronghold. The house was intended to support cultural exchanges between the people of El Salvador and China, but Salvadoran officials expressed concern that it will be used for political purposes. SIMO reported that in early June 2005, the Chinese notified the FMLN that it was canceling a planned mid-June visit by a high-level FMLN delegation to China due to Beijing's displeasure with internal dissension within the FMLN that led to the resignation of 300 FMLN party loyalists.
SIMO also reported that on December 12, 2004, a Chinese delegation headed by the Central Committee's Sub-Director for Latin America and the Caribbean met in San Salvador with representatives of the FMLN and leftist groups from Guatemala, Honduras, Nicaragua, and Mexico. On December 13, the delegation met with FMLN Mayor of San Salvador Carlos Rivas Zamora.
The Salvadoran military had no relations with the Chinese and was not interested in establishing such a relationship. The Salvadorans maintained an extensive military relationship with Taiwan.
It was unlikely that El Salvador will change policy and sever ties with Taiwan to establish them with China while Saca is President, given the Chinese support for the opposition party. There was a belief among some that a more vibrant trade and investment relationship with China could bring benefits to the Salvadoran economy. Balanced against this potential, however, was the tangible aid and investment that Taiwan offered.
As the China-U.S. trade war ratcheted up and tensions rise between El Salvador and the U.S. over immigration policies, including the pending deportation of 200,000 Salvadoran migrants, the country's ruling party and former Marxist guerillas group, the FMLN, appeared to be poised to embrace Beijing. After Taiwan preemptively severed relations with El Salvador 21 August 2018 in advance of its diplomatic recognition of Communist China, more scrutiny is being placed on the massive Port of La Union project Beijing will likely take over and its potential as serving as China's first "military base" in the Americas. Taiwan announced that it would sever diplomatic ties with El Salvador in advance of its anticipated switch to China, after Taiwan refused to foot the bill for the Port of La Union project and the presidential election scheduled in February 2019.
In July 2018, U.S. Ambassador to El Salvador Jean Manes expressed concerns that China is probing Latin America for opportunities to use dept-trap diplomacy to gain leverage over countries in the region and potentially even use such deals to install military facilities, according to the report: "They are trying to find weak spots in the region, where they can make these kinds of arrangements... we are concerned that it is not only investment in a port, but then they want to do something with their military and they want to expand Chinese influence in the region. It is a strategic matter and we all need to keep our eyes open to what is happening."
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